Rewards backfire in online commerce

March 11, 2003

The offer of a reward may help police track down a suspect or lead to the return of a lost wedding ring, but it won’t get Internet users to give out personal information, a University of Florida study shows. People are actually less likely to type their name, address and other personal information into a Web site for a reward because they tend to regard the offer as suspicious, according to the study, which appears in the 2002 Advances in Consumer Research.From the University of Florida:UF study: Internet shoppers wary of giving personal info for rewards

GAINESVILLE, Fla. — The offer of a reward may help police track down a suspect or lead to the return of a lost wedding ring, but it won’t get Internet users to give out personal information, a University of Florida study shows.

People are actually less likely to type their name, address and other personal information into a Web site for a reward because they tend to regard the offer as suspicious, according to the study, which appears in the 2002 Advances in Consumer Research.

“I think rewards make people feel uncomfortable about what the information might be used for,” said Barton Weitz, a UF professor of business and executive director of the David F. Miller Center for Retailing Education and Research.

Weitz is one of three UF researchers who led a study on the factors that prompt consumers to give out or withhold personal data on the Web. An article on the study appeared in the 2002 Advances in Consumer Research, an annual journal.

The researchers examined the responses of 114 UF undergraduate volunteers to a number of Web sites that asked for personal information. Some offered rewards; others did not. Some represented well-known companies; others represented unknowns. Some sites had extensive privacy policies, while others had brief policies or none at all.

The results were unambiguous. While the offer of a reward made the study’s participants more reluctant to divulge personal information, a complete privacy policy helped to persuade them to let down their guard. Some 43 percent of the study’s participants said a privacy policy alleviated their concern about giving out information, while only 12 percent said they were motivated to do so by the reward. The students also shared more information with well-known companies than with companies they had never heard of.

Weitz said college students tend to be bigger risk-takers than the general public, so the results of the study likely would be even more pronounced if participants had represented a more diverse population.

“Most people feel that if there is a reward there is probably some negative consequence out there,” he said.

Mary Culnan, the Slade Professor of management and information technology at Bentley College in Waltham, Massachusetts, has also studied consumer privacy. She said the results highlight the importance of online privacy policies.

“I think it is very interesting,” Culnan said. “Since trust is key to disclosing information, the results track with current theory that brand and a privacy policy are important in signaling that a firm is trustworthy.”

Weitz said research he has done following this study found that people were more willing to respond to a reward if the company is well known. But in general, he said, companies today are moving away from rewards to soliciting personal information in other ways. For example, many companies now allow anyone limited use of their site but request personal data from users once they seek something specific. Many newspapers, for instance offer partial access to stories, but full access comes only after registering.

That tactic, he said, may introduce a different kind of resistance from consumers.

“With the direction things are going, I think the hassle is becoming a bigger factor than privacy in many people’s eyes,” he said.